Bank of Queensland buys CIT Group NZ

By Gareth Vaughan CIT Group New Zealand Ltd, a local finance company whose American parent filed for bankruptcy last November, is being acquired by Bank of Queensland. In a statement released late on Monday, the Australian bank and the US provider of financing to medium and small businesses said Bank of Queensland was buying both CIT Group Australia and CIT Group New Zealand. This includes the CIT ANZ vendor equipment finance business which operates in the information technology  and office market, plus the motorcycle and power equipment market. According to KPMG's Financial Institutions Performance Survey, CIT Group New Zealand had total assets of NZ$52 million at December 31, 2008. The deal is expected to close in the second quarter. Read Bank of Queensland and CIT's full statement below.

Bank of Queensland Limited (BOQ) (ASX: BOQ), a leading Australian financial institution, and CIT Group Inc ("CIT") (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today signed a purchase agreement under which BOQ will acquire Sydney-based CIT Group (Australia) Limited and CIT Group (New Zealand) Limited (“CIT ANZ”). BOQ will acquire the CIT ANZ vendor equipment finance business which operates in the IT and office market as well as the motorcycle and power equipment market providing finance to customers of a number of well known vendors. The transaction is expected to close in the second quarter of the 2010 calendar year. As part of the transaction, CIT ANZ intends to repay its outstanding fixed and floating rate notes. BOQ currently has a successful equipment finance book of approximately AUD $3.4 billion (US$3.2bn) and the acquisition of CIT ANZ represents around 15% of this book. At 31 December 2009, CIT Group (Australia) had AUD $525 million (US$485m) in assets and approximately 125 employees. BOQ Managing Director David Liddy said, “This purchase provides BOQ with access to a strategic specialised market and an ideal growth platform from which to grow new vendor relationships. We see significant growth in the vendor finance market and this acquisition provides an ideal growth platform for BOQ. The CIT ANZ business has a reputable track record in the domestic market and will complement BOQ’s current core competencies in the equipment finance market. “The business fits in with our focus on gaining greater market share in the SME segment and augments our existing equipment finance capabilities,” Mr Liddy continued. “We currently have a strong presence in both the direct channel (our branch network) and the broker network, and this purchase will round out our offering with a strong vendor finance presence. The CIT ANZ business has a strong balance sheet, with margins consistent with the Bank’s stated intention of growing its higher margin portfolios. We expect the acquisition to be earnings per share accretive immediately from completion. However, this transaction will not have a material impact on our FY10 results.” Mr Liddy also said that the Bank intended to operate CIT ANZ as a stand-alone business, “CIT ANZ has a strong and experienced management team with the ability to expand and grow the business, and our intention is that they will continue to manage the operations and drive this growth. This is a significant and important partnership for BOQ and we are looking forward to working with CIT on an ongoing basis to continue to bring global opportunities to the local business.” Ron Arrington, President of CIT Vendor Finance, said, “This decision supports CIT’s ongoing efforts to more efficiently operate its Vendor Finance business. The divestiture reduces our exposure to the consumer market, allows us to focus on our core commercial business, and ensures that we are aligned with strategy and market conditions. We will continue to maintain our global vendor franchise, with a strategic presence around the world.” Keith Rodwell, Managing Director of CIT Group (Australia), said, “We remain committed to providing our vendor partners and customers with the quality service they have come to expect. We anticipate a seamless transition and look forward to joining the BOQ team.”